Stocks slip as Bernanke points to end of stimulus

NEW YORK 
Stocks pared their losses after Federal Reserve Chairman Ben Bernanke laid out plans to eventually dismantle the central bank's supports for the economy.

The Dow Jones industrial average slipped 10 points after losing nearly 100 in early trading Wednesday. The initial drop came as Bernanke revealed the Fed's thinking on how to wean the market from some of the massive emergency support measures put in place in the past two years to keep the financial system from collapsing.

Bernanke's plan came in prepared remarks to a House committee although a planned hearing was canceled because of snow.

The central bank likely will begin tightening credit by raising the interest rate it pays to banks on the money they have deposited at the Fed. That would lead to an increase in borrowing rates for consumers and businesses. The Fed chief cautioned that the central bank is not yet ready to boost interest rates, which stand at record lows.

Craig Kaufman, co-founder and head of capital markets at Kaufman Bros. L.P. in New York, said the Fed's plan is reasonable and didn't represent a shift in policy.

"We're sort of in this fake world and we need to show that we're moving back to a normalized process," Kaufman said, referring to the record-low interest rates.

Bernanke's statement comes as investors await details about a potential rescue package for Greece. Officials said the European Union member nations have made no decisions about how to help the debt-burdened country, but talks are continuing. There are concerns that debt problems in Greece, Spain and Portugal would spread and upend a global economic recovery.

European debt problems were the latest in a string of concerns that sent the market retreating over the past four weeks after a sharp 10-month advance. China's plans to curtail economic growth to avoid speculative bubbles and President Barack Obama's calls to curb trading by large financial institutions led to the decline.

Falling stocks narrowly outpaced those that rose on the New York Stock Exchange, where volume came to 457.3 million shares compared with 651.8 million shares traded at the same point Tuesday. Analysts said volume was light in part because heavy snow along the East Coast kept some traders out of the market.